Do NRIs Need to File an Income Tax Return in India?

NRIs, or Non-Resident Indians, are individuals who live outside India for more than 183 days but do not earn their primary income in the country. Despite this, the responsibility of filing an income tax return in India for NRIs arises based on various criteria, including taxable income in India, tax treaties, and the source of income.

Understanding the Basics

The Indian Income Tax Act, 1961 Section 6 and Section 9 mandates that any income arising or accruing in India is taxable, irrespective of the individual's residential status. Therefore, NRIs must consider their tax obligations in India, even if they live abroad.

Criteria for Filing an ITR

NRIs may need to file an income tax return in India if their total income in India exceeds the basic exemption limit, which is currently Rs. 250,000 (as of 2023).

For example, if an NRI owns a house property in India and earns rental income, they will need to file an income tax return if the rental income exceeds the exemption limit. Similarly, income from banks, interest on NRO accounts, and other domestic sources can also trigger the need to file an ITR.

Exemptions and Non-Filing Conditions

Not all NRIs are required to file an income tax return. If their income in India is below the exemption limit and no tax deduction at source (TDS) has been applied, they may not need to file. However, it is still advisable to consult with a tax expert to ensure compliance.

In cases where TDS has been deducted but eligible for a refund, NRIs can authorize a Tax Return Preparer (TRP) to file their ITR and claim the refund.

What Counts as Taxable Income for NRIs in India?

The following sources of income are generally taxable for NRIs in India:

Bank Interest: Interest earned on both NRO and NRE accounts. House Rent: Rental income from property in India. Salaried Income: Any salary received from a job in India. Rent Received in India: Income from property or assets that, while earned abroad, is received in India.

Conclusion

While NRIs are not required to file income tax returns based solely on their residence outside India, they must still comply with Indian tax laws regarding income generated or received in the country. It is essential to stay informed about changing tax laws and consult with a tax professional to ensure compliance and avoid future scrutiny.

For more details and specific guidance: Please refer to the below video for a comprehensive overview: